President Bush Signs New Energy Tax Incentives Into Law

October 27, 2004

President Bush signed H.R. 4520, the "American Jobs Creation Act of
2004," into law on October 22nd. The new law creates and extends a number of
energy-related tax credits, including an expansion of the renewable
energy production tax credit. This credit formerly applied only to
wind energy and some biomass energy projects, but Section 710 of the
law now expands the credit to a wide range of biomass, geothermal, and
solar energy projects, as well as hydropower produced from small
irrigation projects. The tax credit applies to facilities placed in
service before the end of next year.

The bill's Title III also extends the tax credit for ethanol through
2010 and creates a new tax credit for biodiesel, effective through
2006. It also removes a disincentive for ethanol and biodiesel
production by eliminating any impact on the Highway Trust Fund caused
by the tax credits.

Section 701 of the law places the U.S. Environmental Protection Agency
(EPA) in charge of a demonstration program to provide up to
$2 billion in tax-exempt financing to green building and sustainable
design projects on so-called "brownfields"—abandoned industrial
sites. The EPA's aggregate goal for the program will be to reduce
electric consumption from traditional sources by 150 megawatts, reduce
daily U.S. sulfur dioxide emissions by 10 tons, expand the domestic
solar photovoltaic market by 75 percent (compared to the market growth
from 2001 to 2002), and generate at least 25 megawatts of power from
fuel cells. The projects must be partly supported by state or local
governments and must be nominated by state or local governments within
the next six months.